Sound business principals let Rode Microphones make a noise in China

10 Min Wrap: Founder Peter Freedman says his Western Sydney manufacturing plant in Silverwater can produce a range of niche digital microphone products for less than it would cost in China.

RODE Microphones is beating China at its own game. Founder Peter Freedman says his Western Sydney manufacturing plant in Silverwater can produce a range of niche digital microphone products for less than it would cost in China.

Now the Asian powerhouse is one of his biggest customers — and it started with him knocking on shop doors to sell a cheap import from China.

The business is now a global brand leader, exporting into 108 countries. But getting there involved “six years of hell” in the 90s.

Freedman, 57, inherited an electronics installation business from his father, an engineer: “I spent my youth mixing bands in pubs and doing installs of PA systems in clubs. I take over the business, borrow a whole lot of money in the late 80s, interest rates go up to 20 per cent and everything turns … I lost my house, lost everything. I had no understanding of business. I’m not a bad sound guy but I knew nothing about profit or loss or anything. I thought if there were cheques in my cheque book, I must have money.”

However, the original digital microphone he found in China gave him a differential in the market. At around $500, it was a quarter of the cost of competitors’ products. He named the new company Rode after a mate said the microphone would sell “as fast a rodent up a drain pipe”. He has been investing heavily in research and development, creating a range of 120 products, including 40 microphones, with more than 90 per cent of the products made in Silverwater exported.

He says Rode is able to bring new products to the market quicker than the bigger competition can rollout a new brand logo: “When I started I didn’t have a hand drill. We were nobody and now we are the biggest.”

Share price takes flight for retailer

FLIGHT Centre shares surged more than 10 per cent after the travel retailer defied sceptics with a better-than-expected profit result and stronger outlook for the year ahead.

Its underlying pre-tax profit slipped 3.4 per cent to $363.7 million, which was at the upper end of the guidance it released in June and above analysts’ expectations.

And the company has flagged growth of 4-8 per cent for the year ahead, citing an improved outlook for its core Australian market and the strength of its overseas operations. Flight Centre is one of the most shorted stocks on the market, so the better-than-expected result saw its share price rally $3.72, or 11.5 per cent, to $36.01 yesterday.

Chief executive Graham Turner said the company’s international and corporate travel operations were growing well, but its 2015-16 guidance was contingent on a better performance from its Australian leisure business.

“We’re pretty confident most of our overseas (operations) will grow.”

China is ‘good for the long term’

ORICA chief Alberto Calderon says the meltdown in the Chinese sharemarket has not changed the long-term growth prospects for the world’s second biggest ­economy.

Speaking after he rolled out a new executive structure at the explosives maker yesterday, Mr Calderon said any other country would be happy to have China’s economic growth rates.

Global markets have been thrown into turmoil this week amid concerns about the Chinese economy.

Mr Calderon said the volatility in the Chinese stock markets had not changed the nation’s ongoing demand for physical products.

“Any other country in the world would be happy to have that,” Mr Calderon said.

Radio repair comes at cost

SOUTHERN Cross Austereo has posted a second straight year of losses as it repairs the damage caused by the loss of radio stars Kyle and Jackie O.

The owner of stations including 2DayFM and FOX FM, and the Triple M network, suffered a 20 per cent fall in earnings from metropolitan radio in the year to June, amid a weaker ratings performance.

That far outweighed a slight increase in earnings from its regional radio and television businesses, while $361 million in writedowns caused a $285 million loss.

Billabong back on a wave

BILLABONG the surfwear group is riding high after returning to profit for the first time in four years.

Buoyant investors sent the company’s shares jumping 2.4 per cent yesterday to a three-month high of 64.5c.

Billabong chalked up a net profit of $4.2 million for the year to June, bouncing back from a $233.7 million loss the previous year.

It marks the group’s first time in the black since 2011, as it starts to reap the rewards of an intensive turnaround program.

Upcoming Billabong surfers Ellie-Jean Coffey and Felicity Palmateer. Picture: Luke Marsden

Full-year underlying earnings also grew for the first time since 2008, up 8.8 per cent to $65.7 million. Global revenue rose 2.6 per cent to $1.05 billion.

“Challenges remain,” Billabong chief executive Neil Fiske said. “But this result provides the conviction to see through the complex changes we’re undertaking globally.”

Stability builds after Monday’s madness

A REBOUND in key overseas markets has helped to push the Australian market more than 1 per cent higher for its third straight day of gains.

A 4 per cent rise in US stocks overnight gave local investors a sense of stability after Monday’s $60 billion wipe-out, Patersons Securities adviser Sam Fimis said.

“Wall St provided a good reason to rebound strongly,” Mr Fimis said. “At these prices, investors will feel they’re getting a pretty fair deal.”

The benchmark ASX 200 index closed up 60.5 points, or 1.2 per cent, at 5233.3 points while the All Ordinaries index was up 63.7 points, or 1.2 per cent, at 5242.6.

CBA added 30c to $76.43, Westpac gained 36c to $31.64, NAB rose 17c to $31.56 and ANZ was up 50c to $28.57.

Health products maker Blackmores was up 9 per cent at $109 after breaking $100 a share on Wednesday.

Wealth manager Perpetual shot up $2.48, or 6.1 per cent, to $43.40 after it lifted its full-year net profit by 50 per cent to $122.5 million due to a ­cost-cutting program.

Detention centre operator Transfield Services rose 3.5c, or 3.5 per cent, to $1.04 after saying the costs that affected its 2014-15 bottom line would be one-offs.

Retail Food Group, owner of Donut King and the Gloria Jean’s and Di Bella Coffee chains, added 10 per cent to $5.28 after lifting underlying profit by nearly 50 per cent.